‘Drop’ in joblessness hides increase in misery

chart_0815The government reported on Aug. 2 that the official unemployment rate dropped from 7.6 percent to 7.4 percent in July. The economic spin masters are also hailing the “greater than expected” economic growth of the gross domestic product (all goods and services produced).

The anemic GDP growth in the second quarter of 1.7 percent annually looks good only when compared to the bourgeois economists’ earlier fearful predictions of less than 1 percent growth. And it towers over the worse economic growth in the first quarter, which was barely 1 percent. This pathetic growth rate shows the continued inability of the capitalist system to mount a robust expansion four years into the so-called recovery. And this growth at a snail’s pace leaves tens of millions of workers without jobs or forced to take poverty-level, low-wage, oppressive jobs.

The actual jobs numbers give the lie to the positive spin on a decline in official unemployment. Officially, 162,000 jobs were created in July, just slightly above the monthly 150,000 needed to provide jobs to the incoming generation of workers.

More importantly, of the jobs created, 40 percent were in the low-paying retail, hotel and temporary job industries. These jobs involve the worst kind of exploitation of African Americans, Latinos/as, immigrant workers and poor whites. Construction, on the other hand, took a hit and lost a net of 6,000 jobs, mostly because the austerity program of the bankers put government construction on hold.

President Barack Obama recently made a trip to an Amazon facility in Chattanooga, Tenn., to call for “a better deal for the middle class.” He, along with the entire capitalist establishment, has misnamed the working class the “middle class” in order to erase any sense of class identity among the proletariat. And his talk was just a repetition of the appeal for investment in infrastructure and environment, which he has never really fought for.

He went to Amazon because he was able to announce that the company was creating 5,000 jobs. But the speech backfired when it was revealed that the jobs paid $11 an hour and were largely exhausting work in stock warehouses. “In our viewpoint these are great jobs,” said Amazon spokesperson Kelly Cheeseman as she tried to defend poverty wages for low-end jobs. (Wall Street Journal, Aug. 1)

The grim facts in July tell a different story. In the overall economy, total hours and average hours worked both fell; wage growth declined. The official number of workers out of work for six months or more increased. The number of workers on forced part-time increased by 19,000. The total now on forced part-time is estimated at 8.2 million after four years of “recovery,” as compared with only 4.4 million in 2007 before the downturn.

Employment levels stuck at historic lows

The most important number of all, which is hardly mentioned in the capitalist press, is the actual employment rate, that is, the percentage of working-age adults who have a job. This number was 63.3 percent in the beginning of 2007. It dropped to 58.3 percent by 2009 and has not budged above 58.7 percent since the “recovery” began. That means out of every 100 working-age people, 41 have no job. (Ezra Klein, Washington Post, Aug. 1; see graph from the Center on Budget and Policy Priorities)

This means that millions have dropped out and are no longer included in the labor force. The Congressional Budget Office estimates that the “potential labor force” is 159.2 million, but the official size of the labor force is 155.8 million. Thus there are officially 3.4 million “missing workers.” (Heidi Shierholz, Economic Policy Institute, Aug. 2)

That 3.4 million is in addition to the 6.6 million the Labor Department reports as in the workforce but not actively seeking work. In July, another 37,000 dropped out. As a share of the population, the labor force is at a three-decade low.

These totals do not include the 2.3 million prisoners, disproportionately Black and Latino/a, many of whom work at slave wages.

Forbes can’t understand jobless recovery

The Aug. 4 online issue of Forbes Magazine pondered the dilemma that the capitalist system faces and the crisis that it brings upon the workers.

Forbes cited Brian Hamilton, the chairperson of a financial firm. In a worried tone, Hamilton observed that the “recovery” is 48 months old. The economy is likely to face a downturn soon. And the unemployment rate is still well over 7 percent and won’t go down appreciably.

Hamilton noted, “We are on the back end of the expansion.” He added that with unemployment “above 7 percent in a positive part of the economic cycle, it’s disconcerting to think that it’s likely to increase when the economy begins to contract.

“‘It’s very odd that we have economic growth without … very strong employment growth,’” he added.

Marx explained crisis and the way out

But to Marxists, who understand the capitalist system, the jobless recovery — where capitalism expands somewhat but the workers remain in crisis — is anything but odd.

Capitalism is in the age of automation. Karl Marx showed that as capitalism grows it makes the means of production, distribution and services larger and more productive. Capitalist competition drives this process toward greater and greater productivity in order to amass more and more and more profits. This leads to greater and greater exploitation of the working class, which is the source of all profits and all wealth.

Each capitalist tries to reduce its own labor force, lower the wages of the existing work force and speed up everyone. As each capitalist grouping, such as Amazon, GM, Walmart, McDonald’s, GE and so on, uses more and more automation to reduce its own labor force, thus putting more and more skills into software and machines, the result is a vast low-wage work force and the relentless growth of what Marx called “the reserve army of unemployed.”

This inevitably involves attacks on unions, export of jobs to low-wage areas of the world to super-exploit workers in poor countries, importation of vulnerable undocumented workers, wage theft, violation of labor laws, and so on.

Marx showed that the more productive industry becomes, the harder it is for the capitalists to expand production. When they do, the enormous amount of commodities produced piles up quickly and the low-wage working class cannot buy them.

Overproduction mounts. Thus there is no profit in producing. Capitalism hits a wall. If the bosses push ahead with production, the whole economy will quickly come crashing down. But when they hold on to their trillions of dollars in cash and use it for speculation instead of investment, millions of workers remain unemployed. Either way, the system brings about a crisis for the workers and the oppressed.

All this flows from a process described by Marx 150 years ago. But Marx did not just describe the evils of capitalism. He also showed how the intensified exploitation and the growth of mass unemployment would eventually cause workers to rebel, organize and overthrow the capitalist profit system once and for all.

Goldstein is the author of “Low-Wage Capitalism” and “Capitalism at a Dead End.” The latter has been translated into Spanish as “El capitalismo en un callejón sin salida.” To order books, see Amazon.com